Gulf Oil Well Success Boosts Upside for Anadarko, Other Energy Names

By Dimitra DeFotis

Success in an appraisal well that hit oil in the Gulf of Mexico is an especially good sign for shares of Anadarko Petroleum.

A rise in oil prices Wednesday, up 14 cents to $92.30 for U.S. benchmark crude, also boosted energy names.

Shares of Anadarko Petroleum (APC) , the operator of the well, are up $3.02, or 3.6%, to $86.30, in morning trading. Other exploration and production companies with interests in the successful well also are rallying: Cobalt International Energy (CIE) is up 8.5%; ConocoPhillips (COP) and Marathon Oil (MRO) are each up 1%.

Research analysts at boutique energy firm Simmons & Co. called the results in the Shenandoah-2 Appraisal well “very positive news from the drill bit for Anadarko,” with “more than 1,000 net feet of oil” in high-quality sands with other positive characteristics. Simmons upped its estimate for Anadarko’s net asset value by $2 to $128. That’s 48% upside from the current price.

“We would not be surprised if this ultimately doubled the Shenandoah resource potential from Anadarko’s 300+ MMbo estimate to 600 MMbo. … Year to date, Anadarko is up 12% vs. EPX [exploration and production companies] up 9%.”

For ConocoPhillips and Marathon Oil, and other players, results in the Shenandoah are a positive indicator for further hydrocarbon discoveries in nearby properties.

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